Former Executive Managing Director of Och-Ziff Capital Management Indicted (defrauded charuty)

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https://www.justice.gov/usao-edny/pr/former-executive-managing-director-och-ziff-capital-management-indicted-defrauding

Department of Justice
U.S. Attorney’s Office
Eastern District of New York

FOR IMMEDIATE RELEASE
Wednesday, January 3, 2018

Former Executive Managing Director of Och-Ziff Capital Management Indicted for Defrauding Charitable Foundation and Obstructing Justice

A 10-count indictment was unsealed today, in federal court in Brooklyn, charging Michael Leslie Cohen, a former executive managing director of New York-based hedge fund Och-Ziff Capital Management Group LLC (“Och-Ziff”), for his alleged participation in a scheme to defraud one of the hedge fund’s clients, a large charitable foundation, when recommending financial investments relating to the African mining sector. Cohen is charged with one count of conspiracy to commit investment adviser fraud, one count of investment adviser fraud, one count of conspiracy to commit wire fraud, and four counts of wire fraud. Cohen is also charged with conspiring to obstruct federal grand jury and U.S. Securities and Exchange Commission (SEC) investigations and making false statements to federal agents. The indictment was returned under seal by a federal grand jury sitting in Brooklyn, New York on October 5, 2017, and relates to Cohen’s alleged conduct between 2008 and 2013.
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The indictment alleges that, beginning in or about 2008, Cohen and his co-conspirators carried out a scheme to defraud a large charitable foundation and investor (the “Charitable Foundation”). Cohen violated his fiduciary duties to the Charitable Foundation by making material misrepresentations and omissions in connection with a proposed investment in shares of an African mining company. Through an Och-Ziff investment fund and joint venture overseen by the defendant, Cohen fraudulently induced the Charitable Foundation to consent to the purchase of shares in the African mining company without disclosing numerous conflicts of interest that existed in the transaction. Among other things, Cohen failed to disclose that one of the proposed sellers of the shares personally owed Cohen $18 million – for a loan used to finance a luxury yacht – and would use the proceeds from the sale of shares to partially repay his debt to Cohen. Cohen also failed to disclose that he personally controlled another portion of the shares in the African mining company that would be sold as part of the transaction.

The indictment further alleges that in order to conceal his fraudulent scheme and self-dealing, Cohen conspired with others to cover up facts about the transaction after the SEC began an investigation of Och-Ziff in 2011. Cohen and others engaged in a number of acts to obstruct both the federal grand jury and SEC investigations, including concocting a false, backdated letter and making false statements to federal agents and the SEC.
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[nitpicker]

1. More from Financial News

https://www.fnlondon.com/articles/ex-och-ziff-deal-maker-faces-charges-tied-to-alleged-african-bribery-scheme-20180104

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Michael L. Cohen, once a high-flying dealmaker at hedge-fund giant Och-Ziff Capital Management Group, is facing criminal charges that he defrauded an Och-Ziff client in an alleged scheme connected to the firm’s investments in Africa, federal prosecutors said, The Wall Street Journal reports.

According to an indictment filed in Brooklyn federal court in October and unsealed Wednesday, Cohen and others conspired to defraud the client — identified as a UK-based charitable foundation — by recommending investments in the African mining sector without disclosing that he stood to receive millions of dollars in the transaction. In addition to fraud and conspiracy charges, Cohen is accused of making false statements and obstructing justice, and of allegedly working to conceal details of the transaction from US securities investigators and a federal grand jury.
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Cohen served as head of Och-Ziff’s European office and had oversight of the fund’s investments in Europe, the Middle East and Africa. He resigned from Och-Ziff in 2013 amid a federal investigation into whether the firm had paid bribes to African governments to get business. The US Foreign Corrupt Practices Act bars firms doing business in the US from giving money or items of value to foreign officials for business.
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